Delta, whose pre-tax income last year was $5.1 billion, declined to comment on the potential impact on customers.
The tax break on jet fuel was initially approved in the mid-2000s when Delta was in financial trouble. It was renewed every few years before the company’s CEO ran afoul of lawmakers in 2015.
Then-Gov. Nathan Deal tried to bring it back last year, only for it to pass the House and stall in the Senate when Delta broke ties with the National Rifle Association, a political no-no, particularly in a year when Republicans were set to battle it out for the party's nomination for governor.
Deal responded after the 2018 session by having the state stop collecting the local portion of the tax on July 1, 2018, and then he signed an executive order suspending collections of the state portion of the tax. The General Assembly backed the executive order and tax break — through the end of this month — during a special session in the fall.
At that time, lawmakers sold it as a “tax cut” for consumers, even though Delta never promised to lower fares.
So Delta and other airlines had to put on another big lobbying push during this year’s legislative session to get the tax break renewed. Kemp, who replaced Deal in January, proposed a 20-year exemption and a small excise tax to be used as matching money to attract federal funding for projects at small airports, such as runway resurfacing.
That hit a nerve with rural lawmakers, who have spent the past few years focusing on the struggling economies of small-town Georgia.
They said the 100 small general aviation airports in the state were in desperate need of money to upgrade their facilities, funding they weren't raising locally. State Rep. David Knight, R-Griffin, told colleagues that Florida and North Carolina spend far more than Georgia does on general aviation airports.
So senators — led by lawmakers who own planes and use general aviation airports — proposed instead a sizable fuel excise tax to raise $120 million for small airports. All of a sudden Delta's tax break turned into a tax hike.
State Sen. Bill Heath, R-Bremen, whose wife manages West Georgia Regional Airport in Carrollton, said during debate on the bill that Delta and other airlines have had tax breaks off and on for several years without their customers seeing an obvious benefit.
“Through this whole period of time when there have been exemptions on jet-fuel taxes, there has been no reduction in ticket prices,” Heath said. “That has been added to the bottom line of a few select (companies).”
A Delta spokesman said of the proposal, “By doubling the tax rate that airlines pay in the state of Georgia and making Georgia the highest jet-fuel-tax state in the country among states with hub airports, it would make the state less competitive and give commercial aviation reason to grow somewhere other than the state of Georgia.”
In the end, neither the House — which passed Kemp’s tax break proposal — nor the Senate would budge, and nothing passed. So starting next month, the airlines and other transportation companies that use jet fuel will go back to paying sales taxes on it.
They will pay more than the 4% state sales tax in many counties. According to the Department of Revenue, they must pay 5% in most counties because the rate includes a 1% local option sales tax — or LOST — a major source of revenue for municipal governments. The rate is 6% in Fulton County because it has a LOST and a 1% MARTA sales tax. But in Clayton County, where most of Hartsfield-Jackson is located, they will only pay the state tax of 4%.
Stay on top of what’s happening in Georgia government and politics at www.ajc.com/politics.